Beware - Fundraiser for vets keeps 87 percent of the money

A telemarketing group calling residents in Southeast Texas to raise money on behalf of the charity group AmVets (American Veterans), based in Maryland, has telemarketers claiming to be members of the military and refusing to give information about the company they work for or how much that company profits from others’ generosity.

But research into AmVets and Xentel America Inc., the company it contracts with for telemarketing solicitations, has revealed that Xentel kept 87 percent of the money it collected for AmVets during 2008 – the most recent reporting period on file, according to records from the IRS. More recent records were not available as official documents from AmVets filed a blank IRS 990 Form in 2010. AmVets is a legitimate charity and is recognized by the U.S. Congress, but the company it has chosen to do business with has a shady history, according to public records.

When The Examiner received a call from a person claiming to be “Petty Officer Pounds from AmVets” the newspaper began asking the man questions about the group he was representing. Knowing the rules regarding active military soliciting donations, the newspaper continued to inquire about the nature of the call.

Pounds never gave his first name and never said that he was officially retired from the U.S. Navy. Additionally, when he was asked what company he worked for, he didn’t know. The newspaper then asked the man, “Well, what company is written on your paycheck?” to which he responded, “I don’t look at my checks.”

But the man purporting to be Petty Officer Pounds was not discouraged by the questioning and continued his attempts at soliciting donations. He explained that AmVets was a veterans service organization that helps veterans with important issues like obtaining benefits and healthcare.

The newspaper then asked if he knew how much of the money raised was actually given to AmVets and how much went for overhead and expenses of the company he was working for. He did not know … or he didn’t want to say.

In its review of the IRS 990 Forms filed by AmVets, it was confirmed that AmVets has a contract with Xentel and that AmVets pays Xentel an hourly rate for collecting money based on a formula that includes AmVets receiving a guaranteed payment of $650,000 plus 13 percent of any money raised in excess of $5 million. According to the 2008 records, Xentel collected about $8.1 million but only just slightly over $1 million went to help the charity. The rest of the money was used for expenses by Xentel. AmVets did receive about $2 million in other revenue, including money from a banquet, membership dues and investments, which brought its 2008 revenue up to $10.1 million.

Unfortunately, the charity spent $10.8 million that year – leaving itself in the red by $700,000.

But even more troubling was the fact that the charity didn’t spend any money on helping veterans, according to Part IX, Line 1, “grants and other assistance to governments and organizations in the U.S.” and Part IX, Line 2, “grants and other assistance to individuals in the U.S.” Both of those lines were left blank; however, compensation for current officers, directors, trustees and key employees was listed at $403,170. And the line item for “other salaries” – those not for key employees or directors – was listed at $887,101, bringing the total cost in salaries alone to more than $1.29 million. Benefits and travel expenses added another $357,355. There is also another line item listed simply as “other” that shows an additional $4.75 million in expenditures.

When contacted about the phone solicitations, AmVets’ Executive Director James King explained the charity had a contract with Xentel to solicit money but the wording used didn’t sound familiar to him and he asked if the newspaper was mistaken in who the caller was claiming to represent.

“They make calls to various places throughout the country and subtract the cost, of course — you know, hiring people to do calls and the cost of the calls and such — and we each get a percentage of what is left over,” King said. “I would think if that person was Petty Officer Pounds then he was probably retired. That would be my guess; he would be retired because they do try to get as many veterans as they can. That is part of our contract with them to hire as many as they can to do this. I would imagine that if a person is calling himself Petty Officer Pounds, that he was a retired petty officer and not active duty. I wouldn’t think those guys would be doing that on active duty. If you are retired, you are still a petty officer. That (soliciting money while on active duty) is somewhat frowned upon by the Department of Defense.”

An Internet search of AmVets revealed it has been given the grade of “F” by the group Charity Watch because so much of its contributions are used for expenses and overhead. A search of the Xentel found the company entered into an agreed order with the Colorado attorney general in 2008 and was named among the worst “commercial fundraisers” by the California attorney general, raising money and giving only 10.91 percent of its collections to the Committee for Missing Children, 10.02 percent of the money it raised for the National Wheelchair Basketball Association, 10 percent to the Children’s Leukemia Foundation and just 6.49 percent of its solicitations to the United Breast Cancer Foundation.

At one point during the conversation, King tried to pass the call off to his “communications department” and then went silent when the questions were asked about why Xentel kept 87 percent of the money it collected. King also claimed to not know that the most recent financial information filed with the IRS was blank.“Well, I thank you for your call,” King said as he hung up.

Attempts to reach Xentel for comment were unsuccessful and the number that was used to call into the newspaper was answered by a recording that referred calls to AmVets.

While we harbor no disrespect for the Wall Street Journal who called us “that scrappy little paper from Southeast Texas,” we prefer to think of ourselves as simple seekers of the truth. We’re of the opinion that headlines and sound bites never tell the whole story. Our readers demand all the facts, facets and flavors of every story or event. And, they expect to be informed, educated and stirred to action.